Wednesday, May 08, 2013

HEI is the holding company created in 1981-83. HEI owns American Savings Bank (ASB) and Hawaiian
Electric Company (HECO). HECO owns MECO and HELCO.

About
130 people converged on downtown Honolulu. Perhaps a quarter were HEI, HECO and
ASB board members and/or employees.

Each
year HEI proposes a slate of candidates and then they get voted into office, this
year with 96% approval. Then the auditor is re-hired, this year with 98%
approval.

This
year a Resolution to approve HEI’s Compensation
was also voted on. The vote was advisory only. Wedged between taking the vote and announcing the results of the vote was the question and answer period. The Advisory Resolution received 83%
support.

A
few questions were asked about the $5-6 million compensation received by HEI President and CEO Constance ("Connie") Lau.

Jeffrey
Watanabe, Chair of the HEI Board, made a few interesting comments: Since Connie
is partially paid with future stock awards, “her take home pay is significantly
less than what is reported in the papers,” and that “not a penny of Connie’s
salary goes into O`ahu’s rates.” Watanabe added that “she has not taken an
increase in the last two to three years” implying that she has made $5-6
million per year for several years.

Connie
Lau stated that HECO has over 1000 MW of renewable energy contracts “in
service, under construction or in active negotiations.” I assume that includes
the 100 MW OTEC plant that is often referred to but never actually filed for approval.

Ms.
Lau mentioned that HECO has “clean energy conservation” projects and that oil
prices are “volatile and unpredictable.”

Ms.
Lau added that HECO has a diverse portfolio of renewable energy resources
including wave. While the military is testing wave projects at the Marine Base,
MECO has the only proposed pilot wave project, and they appeared to have broken
off negotiations with the proposer on that project.

Ms.
Lau noted that Hawai`i law requires than
by 2030, at least 40% of electricity has
to be generated by “clean locally generated resources.” That would be nice, but
the statement suffers from two caveats. First, the energy does not have to be
locally generated.

And
second, HECO recently stated for the first time that the Renewable Portfoli
Standard goal of requiring that 40% of electricity to be from renewable energy
resources by 2030 had a strange trait.

The
numerator (Renewable Energy Use in the State excluding Kauai) is not a subset
of the denominator (HECO, MECO and HELCO
electricity sales) and therefore HECO can rely on some fossil fuels and yet
have an RPS above 100%.

Life
of the Land has sought in recent years, without success, to amend this
corrupted definition.

Ms.
Lau stated that “on the banking side we would love to see interest rates go up.”

The
other interesting issue that received attention was Liquefied Natural Gas
(LNG). HECO President and CEO Richard M. Rosenblum answered a number of
questions about LNG.

Rosenblum stated that LNG “is cleaner than what we
burn today but it’s not carbon zero.”

He noted that HECO was investigating LNG because the Governor
asked HECO to take the lead.

HECO wouldn’t be importing or distributing LNG, but would use
LNG that was brought to HECO plants. The entity that brings LNG into the State
might be a cooperative of LNG-users, The Gas Company, or a Third Party.

HECO would be the largest LNG user in the State. LNG would
also be used by the Gas Company and for transportation.

When asked whether HECO was taken a risk by spending money
building an LNG infrastructure for a fuel that might “come into vogue for a
while” and then lose its appeal, Mr. Rosenblum stated that everything
points to it being a “wise choice.”

LNG is the “least expensive fuel.” There is an infrastructure
approach which is not costly to construct and that is the approach HECO will
take. When he worked on the Mainland a few years ago, you couldn’t get a
contract for longer than 3-6 months. There is currently a glut of LNG supply
that can last more than 100 years. Gas producers are willing to lock in 20-year
contracts. He concluded that “our
interests are completely in line with our customers interest.”